E-commerce firms boost truck rentals during festive season

The surge in truck sales during the first half of the fiscal was largely on account of a low base and an increase in replacement demand

The strong demand from e-commerce companies for goods movement across the country, coinciding with the festive season, saw truck rentals rise by 7% in the month of October, despite a hike in diesel prices by Rs 1.50 per litre.

Cargo movement during the month saw 20% increase with e-commerce firms leading the pack; otherwise it would have been a nominal rise of 1.5% in truck rentals, said the Indian Foundation of Transport Research and Training (IFTRT), the apex body which tracks the industry.

“The R1.45 a litre increase in diesel price in early October normally help increase the truck rentals by around 1.25-1.50%, but because of a steep increase in cargo offering by 15-20% due to the peak festival season and consumer spending, truck rentals surged by 6-7% on trunk routes during October 2015. This includes despatches of consumer durables, electronic goods, furniture and fixture items, gifts, novelties and other items by e-commerce firms during the month,” according to a senior official of IFTRT.

A sharp increase in the movement of apples and oranges from cold storages on medium and long haulage, as well paddy and cotton procurement in various states (intra-state operations) have also helped the truckers with improved fleet utilisation, he said.

The fall in average monthly truck rentals of 5.3-6.9% on trunk routes during April-September 2015, in comparison to same period last year, was mainly due to a decline in diesel prices during this period.

According to the foundation, the lacklustre sale of intermediate commercial vehicles and the shrinking of growth in the heavy truck segment to 15-17% for various variants during October 2015, as against a 28-30% increase in September 2015, was on expected lines because of the price hike of 3-4% post-mandatory fitment of anti-break system (ABS) and speed governor from October 1, 2015.

The surge in truck sales during the first half of the fiscal was largely on account of a low base and an increase in replacement demand. As the investment cycle under the present regime at the Centre has to pick up for the infrastructure sector, small fleet owners are still on wait-and-watch mode. There is an undercurrent of change in fleet-owning patterns as large transport firms, and retail booking and delivery companies are in a fleet expansion mode. Not only this, a large number of small fleet owners have been getting marginalised from the market for the last two to three quarters in various trucking centres, particularly in northern India.